M and M - [2000] FMCAfam 6

FEDERAL MAGISTRATES COURT OF AUSTRALIA

M & M

[2000] FMCA fam 6

PROPERTY ORDERS – Section 79 & section 75 FLA

Applicant:

S M

Respondent:

C L M

File No:

ZE 0112 of 2000

Delivered on:

26 July 2000

Delivered at:

Dandenong

Hearing Date:

25 July 2000

Judgment of:

Bryant CFM

REPRESENTATION

The Applicant in person.

The Respondent in person

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
DANDENONG

ZE 0112 of 2000

S M

Applicant

And

C L M

Respondent

REASONS FOR JUDGMENT

Transfer

This matter was transferred to the Federal Magistrates Court of Australia by an order made on 18 July 2000 and the matter proceeded for hearing on the 25 July 2000.

Applications

There were initially various applications filed by the husband and wife respectively for property settlement, residence and contact.
However, the residence and contact issues were the subject of orders made on 25 October 1999 whereby until further order the wife is to have the sole responsibility for the long term care, welfare and development of the child J A M born 23 August 1995, and that until for order the husband have contact with said child at such times as agreed between the parties from time to time.
These orders were made by consent and although these orders are expressed to be until further order, and the Form 7 applications which underlie the orders were adjourned for hearing, at the commencement of the proceedings the parties both indicated that they wished to finally resolve matters relating to residence and contact on the basis of the orders made on 25 October 1999 and agreed the court should make final orders in those terms.
This left finally the issue of settlement of property for determination between the parties.

Documents relied upon

The wife, who is the applicant in these proceedings relied upon the following documents:
a)Her application for settlement of property filed 6 September 1997;
b)Her affidavit of evidence filed 28 June 2000;
c)Her financial statement sworn 28 June 2000.
The husband relied upon:
a)His response to final orders for property filed 22 May 1997;
b)His affidavit of evidence filed 26 June 2000;
c)His financial statement filed 26 June 2000;
d)His affidavit of documents filed 17 July 2000.
e)An affidavit sworn 20 July 2000 and filed on 25 July with leave.

Orders sought by each of the parties

The wife’s application for settlement of property filed 6 February 1997 that “there be a property settlement pursuant 79 of the Family Law Act in proportion 65% to 35%”.
To make any meaningful sense of that proposal it is necessary to consider what asset pool the wife was relying upon in support of the said application. To put that in its proper context, the wife’s case that the asset pool was considerably greater than that asserted by the husband as the husband had exclusively had the use of the sum of $99,200 being part of a worker’s compensation pay out and failed to account adequately for the use of the funds despite being ordered to do so on 17 May 2000.
Upon closing her case and in the absence of any conclusive evidence to suggest that the husband actually had retained any of the funds received by him, she sought that the funds invested in the name of the parties with Bendigo Bank in the sum of $12,633 together with interest, be paid to her, that she retain the Mitsubishi Sigma motor vehicle and furniture in her possession and that the husband be ordered to transfer his sound lighting equipment and computer to her.
The husband asserted that the asset pool for division consisted of the wife’s car and furniture, the sound lighting equipment and trade equipment in his possession and the proceeds of the former matrimonial home invested in Bendigo Bank. He asserted there was no money left from the compensation payment.
It was conceded that the husband had a small superannuation policy with MLC Ltd and he sought a division of the funds in trust of 65% to the wife and 35% to him with him retaining his superannuation and the other assets in his possession.

The issues

At issue was the question of what assets should be taken into account for the purpose of section 79(4) and section 75(2) of the Family Law Act. The wife asserted that the asset pool should include the sum or part of it received by the husband after separation of approximately $99,200 and asserted that the husband had failed to adequately explain how this sum had been spent. The husband rejected that assertion and asserted that he had consistently made full and proper disclosure of the money utilised by him and further that they were his moneys and properly spent.
Contribution was an issue to the extent that the husband asserted that all of the funds received by him to compensate him for his injury at work were contributions by him and that the wife had not made any contribution to these funds. He pointed in particular to the fact that the deposit on the parties’ home had originally been sourced to this fund. The wife’s parents had initially advanced money to the parties to pay the deposit and were reimbursed from a portion of the husband’s compensation payment.
The wife raised the issue of the husband’s possible redemption of his weekly payments and the concern that if that occurred it might leave him without regular income and without the capacity to pay ongoing child support. The husband rejected any assertion that he was able to redeem his payments.
In relation to the husband’s superannuation, the wife suggested that the husband might be able to access his superannuation on the basis of his being permanently disabled and unable to return to work. The husband again rejected this proposition.

Background

Most of the chronology was agreed by the parties.
The husband was born on 22 March 1965 and is currently 35 years of age. The wife was born on 19 April 1967 and is currently aged 33. The parties commenced co-habitation in 1989 and married on 1 February 1992. Their sum J A M was born on 23 August 1995 and is almost
5 years of age. The parties separated on 19 November 1995 and orders resolving issues of residence and contact for the purpose of these proceedings were made on 25 October 1999. The parties are divorced their decree nisi having become absolute on 25 November 1999. Thus the parties were together for 6 years.
In September 1992 the husband was involved in a serious work accident. He was a licensed air conditioning and refrigeration mechanic and an apprentice at the time. Negligence resulted in him falling through the roof of a factory in which he was working, and sustaining serious injuries. Those injuries included fracture to the back of the skull, an extramural haematoma, sinus fractures, loss of sense of smell, partial lung collapse, kidney damage, liver damage, ruptured catheta and soft tissue damage, fractured wrist and fractured right elbow.
He was hospitalised immediately after the accident in the Alfred Hospital and in intensive care for approximately five days before he was transferred to the trauma ward. He was discharged after three weeks and cared for at home by the wife. The wife asserts that he was anxious to leave hospital and discharged at his insistence on the basis that she would nurse him through his convalescence. In cross examination she conceded that the doctors were prepared to discharge him from hospital on the basis that he was apparently well enough to leave, but nevertheless it is clear that he required a great deal of nursing at home.
The wife asserts that when the husband was discharged from hospital she juggled her accrued annual leave and rostered days off so she could take three weeks off to care for him. She cared for him for approximately two years and kept regular specialist appointments as well as his ongoing day to day care. Initially he was dealing with no less than four specialists and required specialist appointments no less than two per week. He was experiencing a great deal of pain and discomfort and they would often visit the Alfred Hospital and Knox Private hospital in the middle of the night and sometimes on more than one occasion. The husband had difficulty in sleeping and there were many nights when the wife would drive him around to give him some respite from his pain.
Apparently the possibility of workcare paying the wife to stay home was not agreed to by Workcare and the wife continued to work at her job and to provide care to the husband. The only child of the parties, J, was born in August 1995 and the wife was responsible for his full time care. Her obligations to J and the husband caused her a great deal of distress and pressure and in November 1995 the marriage broke down.
As the husband would not leave the home the wife left the home with J and resided with her mother and father for approximately 8 months until she secured some rental accommodation. Since that time she has lived in rental accommodation for two and half years and with her parents for a further twelve months. She is currently residing in rental accommodation with J.
The husband remained in the former matrimonial home until by agreement it was sold. The wife was not in a financial position to take over the existing mortgage and the property was sold on 23 June 1997. Once the costs and expenses associated with the sale were paid and the mortgage was discharged there was a balance of $12,633.51 remaining and that sum was invested through the husband’s former solicitor Hicks & Oakley in the Bendigo Bank.
Prior to separation the husband received $78,000 in compensation for the injuries he received from his accident at work. A portion of that sum had been used to buy furniture and improve the matrimonial home for the parties and their son. A portion of it had been used to repay the wife’s parents for advancing the deposit for the acquisition of their home. At the time that the parties separated they divided up the chattels they had and after repaying the balance owing to the wife’s parents there was $10,000 remaining of which the husband received $7,000 and the wife $3,000. The husband was to stay in the home and pay the mortgage until it was sold.
On 27 March 1996 the husband received a further $99,200. This portion of the payment he said was to compensate him for pain and suffering.
On 27 May 1997 an order was made by consent, restraining the husband from disposing of or dealing with any assets owned either jointly by the parties or in the husband’s name alone subject to the husband giving the wife or her solicitor’s 14 days notice of his intention to do so. The wife asserts that the husband has since that time consistently failed to disclose adequately what happened to the money and furthermore that without her consent and following the making of the order of 22 May 1997 disposed of assets in particular by selling cars owned by him.
Whilst there were no proceedings brought by the wife for breach of the injunction the wife essentially argued the husband’s failure to comply should be taken into account when considering her liability for legal costs occasioned in no small measure by the need to try to ascertain what the husband had done with the funds from the payout he had received. This took the form of issuing a number of subpoenas and applications culminating in orders being made on 17 May 2000 requiring the husband within 14 days to make file and serve an affidavit specifying the application of funds of $99,200 received by him in March 1996 and to provide an affidavit of documents in the form required by the Rules.
I note that despite the order of 17 May the husband did not file an affidavit in compliance with that order until the day of the hearing when I gave him leave to file an affidavit which was sworn on 20 July 2000.
The husband filed a document on 30 May in compliance with the requirement to serve an affidavit of documents.
The husband was cross examined about his failure to advise the wife of his intention to dispose of assets, in particular the two motor vehicles referred to. The husband asserted that he had given notice to the wife and her solicitors but despite the assertion that he could produce documentary evidence was unable to do so. From the evidence it appeared that the husband had not given the wife notice of his intention to sell assets and further on the evidence of the husband those assets were sold at a significantly diminished price, and the wife was prevented from taking steps to preserve the assets.

Application of the $99,200

The husband’s evidence was that he bought a Holden Commodore station wagon on 22 April 1996.
From documents produced by the wife from GMAC Financial Services it appeared that the cost of the vehicle was $45,153. The husband paid a cash deposit of $21,912 and borrowed $23,241. He appears to have made 3 payments of $585.80 and a final payment on the 12 August 1996 of $22,710.56. This resulted in total payments of $46,379.96. The husband had asserted that the total application of his funds to this car was $55,000 including all on road costs and upkeep together with insurance and interest on credit charges. During this time the husband was in receipt of an income from Workcover of approximately $32,000 per annum and should have been meeting ordinary onroad costs. Thus it appears from the evidence that as the cost of the car was only $46,379.6 and there is at least $8,620 the disposition of which has not adequately been explained by the husband.
Furthermore in April 1997 the husband traded in the Commodore on a Ford Econovan. This was year after the purchase of the first vehicle. The husband’s affidavit filed on the 25 July does not disclose the amount he received for the Commodore and he produced no documentation to substantiate its sale value. When cross examined he said that it had been traded in, its value was “incredibly reduced” and there was “not much change at the end”. He said that he had been forced to sell the vehicle but I note that 8 months expired after he had paid it off before its sale and it is difficult to accept that this was the reason for disposing of it. He admitted in evidence that he got $10,000 or $12,000 back out of the trade in transaction. He did not adequately explain what he did with the $10,000 or $12,000.
The husband then apparently sold this vehicle about 9 months later for $10,000 and put those funds into the purchase of a Ford Fairmont Ghia sedan which he says cost him, together with repairs to the vehicle, about $8,000.
Between November 1995 and July 2000 the husband purchased CDs and accessories costing $5,700.
He purchased a personal computer and accessories for $9,800 and assets that he spent approximately $10,000 on mortgage payments from December 1995 to July 1997 when the former matrimonial home was sold.
In May 1996 he purchased trade equipment and accessories costing about $4,000 and between March 1996 and April 1997 purchased sound and stage equipment and accessories and paid for storage costing about $13,500. This purchase he said was with a view to establishing a business but because he is in receipt of Workcover payments he is unable to engage in that employment.
The Ford Ghia was subsequently sold on 8 January 1998 and the husband says he used the funds to help set up his residence in Springvale.
Whilst no doubt the acquisitions by the husband have depreciated over the period of time since 1996, it is equally clear that his failure to notify the wife of his various expenditures has prevented her from securing the retention of assets and money derived by the husband from his second payout. The effect of this is that despite the fact that the husband was in receipt of an income of approximately $32,000 throughout this period the sum of $99,200 has been spent by him and is now reflected only in the sound and lighting equipment and trade equipment and household items in the husband’s possession with a total of $6,800.
The various transactions entered into by the husband have in my view not been satisfactorily explained, and I am left with the impression that the husband regarded the money as his and deliberately avoided advising the wife of his intention to acquire and dispose of assets after the injunction was granted and insofar as at least some of those funds are concerned spent them recklessly without regard to any claims the wife may have to them.
The car transactions in particular where the husband went from purchasing a car which had a price of $45,153 to the position where he now owns no vehicle and has no adequate explanation as to why he needed to keep changing vehicles at a considerable loss on each occasion, is an example of this behaviour. Furthermore the husband has failed to account at all for the two sums of money that I have referred to above, being the $8,620 and $10,000 to $12,000 on changeover of vehicles.
Despite the inadequacy of his explanations about expenditure however, no evidence was produced which established that he has any funds remaining.

Assets to be divided

The husband has not satisfactorily explained all of the expenditure of $99,200 nor the necessity for much of it and at the time of hearing had very few assets left. There are two sums in particular however that the husband failed to adequately explain and I propose to add these back into the pool as assets available for distribution between the parties. Those sums were the difference between what the husband actually paid for the Holden Commodore and that which he said he expended on it namely $8,620 and a further sum of $10,000 to $12,000 which sum the husband received after trading the Commodore on the Ford Econovan and I round those figures off to $20,000. The assets of the parties are therefore as follows:
Moneys added back but received by the husband ................ $20,000
Moneys in trust in Bendigo Bank Account principal only......... $12,633
Wife’s Mitsubishi Sigma motor vehicle....................................... $3,500
Wife’s furniture ............................................................................. $1,000
Husband’s sound and light equipment........................................ $5,000
Husband’s trade equipment and household items.................... $1,800
Total............................................................................................. $43,933

Liabilities

The husband’s liabilities are a Myer card of $2,234 and Commonwealth Bank credit card of $3,763. The husband said that he was paying off a computer on his Myer card although I note that the computer itself is not included in his assets and for that reason I have disregarded the liability. Similarly his credit card to the Commonwealth Bank was not said in any way to relate to the acquisition of the assets which he currently has. I note the husband has legal costs of $3,300. This is not a liability attributable to the wife. I regard the husband’s liabilities as being personal to him.
The wife’s liabilities are Visa card of $3,108 and Mastercard of $591. Again I regard these as being personal to the wife and there is evidence to suggest that they relate to the assets. The wife’s legal costs are $18,159.70.

Contributions

There is no doubt that the husband’s accident at work was tragic and has long lasting effects. It is clearly been a personal tragedy for the husband and also for the family. It was essentially conceded that the deposit for the former matrimonial home ultimately came from the husband’s first payout and sums received and spent by the husband of $99,2000 were also as a result of his compensation.
While there was little evidence, it appears that the parties had little at the date of their marriage and neither suggested that until the time of the husband’s accident their contributions were anything other than equal.
Following the husband’s accident in 1992 there is no doubt that the wife made a very significant contribution indeed to the welfare of the family particularly in her care for the husband upon his release from hospital and as described by her in paragraph 5 of her affidavit filed 26 June 2000 upon which she was not challenged. Between the time of the husband’s accident and their separation at various times she cared for the husband and J. Since separation she has been the primary care giver for J and the husband’s contact with him has not been regular. For example the orders were changed, on the husband’s application from a regular contact arrangement to a less formal arrangement where contact occurs as the parties agree. The mother says there has been no contact between J and his father since March 1998 and her evidence was not challenged.

Thus, whilst the financial contributions in the main have come from the husband’s side by reason of his compensatory payments, the non financial contributions as parent and home-maker to the welfare of the family generally have been overwhelmingly made by the wife. These contributions continue in that she is the primary and virtually sole care giver for J and will be for the foreseeable future.
Taking into account the husband’s greater financial contributions from his compulsory payments and the wife’s significant non financial contributions, the wife should receive 45% of the assets and the husband 55%.

Section 75(2) factors

The wife is not working and is fully engaged in home duties caring for J the young child of the parties. She has a significant debt to her legal practitioners which she will have difficulty meeting in any event from the amount that she receives by way of property settlement, simply because there are no other identifiable assets from funds remaining.
The husband has an income of $611 gross per week from his GCU workers insurance payments and that position is unlikely to deteriorate unless he is able to redeem the payments by a lump sum. Whilst the husband’s income is a result of his tragic injury nevertheless it provides him with an income which is not available to the wife whose ongoing ability to work and support herself is clearly directly affected by her role as primary care giver for their son. This should in my view result in a further adjustment of 20% to the wife entitling her to 65% of the assets.

Conclusion

This will entitle the wife to a total of $28,556.45.
Part of the asset pool includes sums notionally added back of which the husband has had the benefit. Regrettably the asset pool in this case is not large enough to meet the totality of the wife’s entitlement but the orders will provide the wife to have paid to her the sum standing to the credit of the parties in the Bendigo Bank together with any interest accrued thereon, to retain her motor vehicle and furniture and for the husband to transfer to her his right title and interest in the sound and lighting equipment presently in his possession. These assets total $22,133.
The husband will retain his trade equipment and the computer which he is presently paying off. The husband however can meet his liabilities from his income and he has already had the exclusive benefit of $99,200 since separation.

Redemption of workcare payments

The wife tendered documents from the husband’s solicitors Messrs Slater & Gordon which provided information to the husband as to the potential for a claim under section 115 of the Workcover Act. This could, in limited circumstances enable the husband to successfully apply for a lump sum settlement rather than weekly payments. However, the documents tendered were simply excerpts from the claims manual and I have no evidence as to whether in the limited circumstances available, the husband would be likely to be successful in such a claim and I therefore cannot make any findings about it. I propose however to make orders which will provide for the husband to give notice to the wife and an authority to Workcover to advise the wife if he does apply for a lump sum in redemption of his weekly payments to enable the wife to bring an application, pursuant to the provisions of the Child Support (Assessment) Act for a lump sum for J in the event that the husband no longer had weekly payments from which child support could be paid.

Superannuation

Very little evidence was available to me in relation to the husband’s superannuation. It was simply conceded by the husband that he is a member of the MLC Employee Retirement Plan and that his membership entitled him to a withdrawal benefit of $721.88 as at

30 June 1996. These payments attract interest. It appears the Employee Retirement Plan has provision for total and permanent disability payment of $48,300.
Whilst there was no evidence led, it is conceivable, taking into account the husband’s incapacity that an application could be made by him for a payment on the basis of total and permanent disability. In my view if such a payment is made then the wife should be entitled to 45% of that sum having regard to her contributions and s75(2) factors.

I certify that the preceding fifty-nine (59) paragraphs are a true copy of the reasons for judgment of Bryant CFM

Associate:

Date: